Understanding the difference between the cost of attendance and net price when choosing the right school

“Sticker Shock” seems to be a common occurrence the last couple of years. Whether it is groceries or a new car, prices are high on a variety of items. Of course, sticker shock is nothing new when it comes to paying for college. Even during times of low inflation, the cost of college has risen quickly and is now at a level that can seem impossible to afford. 

While it is true that college is expensive and one of the larger investments you are likely to make, the actual cost is often much less than the published “sticker price.” For example, according to a College Board study the average net price of a private university was $33,720 (vs. $54,880 sticker price) and $19,230 for a public university (vs. $26,820 sticker price).

Often, the initial shock of the excessive cost of private colleges will cause parents and students to rule these colleges out early in the process. However, the net price of a private college (or out of state public college) could be equal to or below the cost of an in-state public college. This is dependent on several factors and the net cost is unique for each student. Instead of focusing on the sticker price when researching colleges, focus on the question: “What will it cost MY CHILD to attend this school?” You may be surprised once you start looking closer.

COA vs net price

The college’s cost of attendance (or COA) is the advertised price and includes, tuition, fees, room & board, books, supplies and miscellaneous expenses. In general, COA will be least expensive for in-state public colleges. Net price is a better estimate of what you will pay and should be the focus during the college search. Net price is COA minus any financial aid offered by the college – including both need-based and merit aid. Most of our clients will not qualify for need-based aid, so the differences will come from the merit aid offered to your student. This figure can vary significantly for each college – depending on your student’s academic record and overall profile, how that profile matches the college’s ideal applicant, as well as the college’s financial situation. 

Finding the true cost

So, how can you find out the actual cost? Most colleges have a “Net Price Calculator” on their website, which allows you to put in academic and financial data for a personalized cost estimate. If you can’t find it on a college’s website, you can visit the Net Price Calculator at the Department of Education’s website. If you’re just starting a college search and want general information across a range of colleges, College Navigator includes statistics for cost of attendance, average aid awarded per student and the average net cost. 

Bottom line: do not rule out a college based on sticker price alone. If a college is a good fit (even if it is private or out of state), dig a little deeper to find out the actual cost. Regardless of where you are in the college planning timeline, we are here to help. Please email or call if you want to set up a meeting or talk by phone.

Mary McCraw, CFP®

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